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Vonage Holdings Corp (NYSE:VG)
Beneish M-Score
-2.99 (As of Today)

The zones of discrimination for M-Score is as such:

An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.

Vonage Holdings Corp has a M-score of -2.99 suggests that the company is not a manipulator.

VG' s Beneish M-Score Range Over the Past 10 Years
Min: -5.34   Max: 0.99
Current: -2.99

-5.34
0.99

During the past 13 years, the highest Beneish M-Score of Vonage Holdings Corp was 0.99. The lowest was -5.34. And the median was -2.99.


Definition

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.

The M-Score Variables:

The M-score of Vonage Holdings Corp for today is based on a combination of the following eight different indices:

M=-4.84+0.92 * DSRI+0.528 * GMI+0.404 * AQI+0.892 * SGI+0.115 * DEPI
=-4.84+0.92 * 1.084+0.528 * 1.0334+0.404 * 1.0093+0.892 * 1.0302+0.115 * 0.9147
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9389+4.679 * -0.1354-0.327 * 1.0192
=-2.99

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $19.9 Mil.
Revenue was 230.124 + 223.36 + 221.858 + 219.73 = $895.1 Mil.
Gross Profit was 153.014 + 147.961 + 149.432 + 148.687 = $599.1 Mil.
Total Current Assets was $136.8 Mil.
Total Assets was $784.6 Mil.
Property, Plant and Equipment(Net PPE) was $49.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $62.0 Mil.
Selling, General & Admin. Expense(SGA) was $457.0 Mil.
Total Current Liabilities was $190.9 Mil.
Long-Term Debt was $198.8 Mil.
Net Income was 3.406 + 3.433 + 8.347 + 7.469 = $22.7 Mil.
Non Operating Income was -0.247 + -0.05 + 0.032 + -0.577 = $-0.8 Mil.
Cash Flow from Operations was 46.105 + 37.665 + 35.237 + 10.724 = $129.7 Mil.
Accounts Receivable was $17.8 Mil.
Revenue was 214.533 + 214.71 + 218.878 + 220.733 = $868.9 Mil.
Gross Profit was 149.881 + 149.03 + 150.486 + 151.574 = $601.0 Mil.
Total Current Assets was $115.2 Mil.
Total Assets was $674.5 Mil.
Property, Plant and Equipment(Net PPE) was $49.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $51.4 Mil.
Selling, General & Admin. Expense(SGA) was $472.5 Mil.
Total Current Liabilities was $185.8 Mil.
Long-Term Debt was $142.9 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(19.913 / 895.072) / (17.832 / 868.854)
=0.02224737 / 0.02052359
=1.084

2. GMI = Gross Margin Index

Measured as the ratio of gross margin in year t-1 to gross margin in year t.

Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(147.961 / 868.854) / (153.014 / 895.072)
=0.69168238 / 0.66932493
=1.0334

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (136.807 + 49.483) / 784.566) / (1 - (115.24 + 49.63) / 674.46)
=0.76255662 / 0.75555259
=1.0093

4. SGI = Sales Growth Index

Ratio of sales in year t to sales in year t-1.

Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=895.072 / 868.854
=1.0302

5. DEPI = Depreciation Index

Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.

DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.

DEPI=(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1)) / (Depreciation_t / (Depreciaton_t + PPE_t))
=(51.407 / (51.407 + 49.63)) / (62.024 / (62.024 + 49.483))
=0.50879381 / 0.55623414
=0.9147

6. SGAI = Sales, General and Administrative expenses Index

The ratio of SGA expenses in year t relative to year t-1.

SGA expenses index > 1 means that the company is becoming less efficient in generate sales.

SGAI=(SGA_t / Sales_t) / (SGA_t-1 /Sales_t-1)
=(457.049 / 895.072) / (472.517 / 868.854)
=0.5106282 / 0.54383936
=0.9389

7. LVGI = Leverage Index

The ratio of total debt to total assets in year t relative to yeat t-1.

An LVGI > 1 indicates an increase$sgai= in leverage

LVGI=((LTD_t + CurrentLiabilities_t) / TotalAssets_t) / ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
=((198.755 + 190.928) / 784.566) / ((142.868 + 185.821) / 674.46)
=0.49668607 / 0.48733654
=1.0192

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(22.655 - -0.842 - 129.731) / 784.566
=-0.1354

An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.

Vonage Holdings Corp has a M-score of -2.99 suggests that the company will not be a manipulator.


Related Terms

Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Vonage Holdings Corp Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.10840.89120.80990.86121.01481.19451.17150.98570.86591.0841
GMI 1.0160.84320.950.97221.02740.97150.99980.9771.00911.0318
AQI 0.83673.2811.49660.98070.61972.9950.90571.13381.11551.0093
SGI 2.25631.36361.08680.98770.99550.98340.97560.97641.04811.0301
DEPI 0.59820.64170.72750.94130.92341.13870.99360.86940.80270.9147
SGAI 0.71040.8570.68150.90440.891.02121.06211.10170.97660.8859
LVGI 0.7811.43771.12750.99851.28070.31630.87971.15231.0351.0192
TATA -0.19730.0081-0.1021-0.1147-0.56640.4862-0.152-0.0931-0.1072-0.1354
M-score -2.17-1.54-2.90-3.17-5.340.99-3.07-2.99-3.04-2.99

Vonage Holdings Corp Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 1.00360.98570.94720.91030.96580.8661.04831.12061.01191.084
GMI 1.02850.97030.98130.9870.99020.96650.96790.97130.98331.0334
AQI 0.96831.13381.23251.23451.16841.11551.02651.05391.08011.0093
SGI 0.9770.97640.99811.02351.04091.0481.03231.01871.01611.0302
DEPI 0.8220.86940.79050.72980.8690.80270.85620.90390.95950.9147
SGAI 1.01521.07651.07271.03190.9711.00330.9730.96550.98180.9389
LVGI 1.04081.15231.04711.04511.07931.0351.11141.08151.18491.0192
TATA -0.1413-0.0931-0.1139-0.1269-0.1334-0.1072-0.1035-0.1136-0.1125-0.1354
M-score -3.19-2.99-3.03-3.10-3.07-3.07-2.95-2.91-3.02-2.99
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